At A Texas Nuclear Plant, Contractors Promised To Show Billions In Savings. They Haven’t.

The government quietly let the company off the hook, even after they blew a deadline to cut costs.

By Jill AmentFebruary 5, 2018 7:14 am,

As President Donald Trump touts America’s nuclear arsenal, two nuclear weapons plants in the U.S. are running into some financial trouble. The Center for Public Integrity reports that the two plants – the Pantex plant near Amarillo, Texas and the Y-12 facility in Oak Ridge, Tennessee – have failed to keep the ambitious cost savings promises that were made four years ago.

Patrick Malone, a reporter for the Center for Public Integrity, says the problem started once new contractors won a highly competitive bidding process to oversee the two plants.

Ultimately, he says, “it went to a conglomerate that is headed by Bechtel. Before that, both sites, Tennessee and Pantex, under separate contracts, had been operated by another defense contracting giant, Babcock & Wilcox, so there was sort of a novel approach to this contract back in 2013 when they were conducting the competition for it.”

That’s when the two sites were merged for the first time.

“The basis for that idea was that it could generate a great deal of cost savings,” he says. “The group that ultimately won it, Consolidated Nuclear Security, led by Bechtel, had promised $3.27 billion, with a B, in savings over the course of a decade.”

Some critics questioned at the time whether $3.27 billion was a realistic goal.

Malone says most of the savings were supposed to occur during the first three years of the contract, but the company has only been able to produce 14% of the amount that they promised.

Meanwhile, some  employees say that the savings that have materialized have come at the expense of workers.

“In 2015, after about a year of the CNS leadership at these two sites, there was a sort of an internal safety survey of Pantex employees,” he says. “Pantex employees expressed a lot of frustration. They said in the first year of this contract, among other things, they would go to the doctor and learn that the services provided were not covered or were not covered to the extent that they thought they were. CNS was trying to attain some of these savings by nickel and diming things like employee benefits, when really the experts who even awarded this contract that we spoke with said really there’s only one way to save money at these types of plants, and that’s to cut bodies.”

At the end of the first three years of the contract, Malone says, CNS had a firm deadline to demonstrate that they were on track to meet their savings goal.

“Basically 80 percent of what they had promised was their target,” he says. “And they fell way short of that.”

The contractors scrambled to renegotiate for an extension – and they got it.

“Even though they didn’t meet these goals, the contractors were able to negotiate with the government to preserve the opportunity to continue to get contract extensions. This was supposed to be a really hard and firm sort of deadline and they knew they were going to miss it and the government said ‘That’s okay, please proceed.’”

Malone says that with this extension, CNS will keep its lucrative contract to continue to operate the sites.

Written by Jen Rice.